Texas Insurance License Exam Prep P&C
Questions with 100% Correct Answers
What are 3 subjects an auto policy covers?
1. Body
2. The vehicle
3. Assets
Bodily Injury Types
Personal Injury
Med Pay
Uninsured Motorist
No Fault Insurance
State stipulates that parties cannot file a claim to the other persons insurance policy unless required
in excess. Instead, each party is required to file a primary claim against their own insurance regardless
who is at fault. EX. Florida
Financial Responsibility Laws
State Laws regulating that people are to carry a minimum coverage amount set by the state to protect
themselves, others, and property.
P.A.P
Personal Automotive Policy
Negligence
The failure to act as a prudent person would under similar circumstances
Legal Liability
Involves proven negligence or fault
Vicarious Liability
Being responsible for the negligent acts of someone else. Ex. Your children
Absolute or Strict Liability
Stems from hazardous or dangerous activities that makes the owner liable WITHOUT the requirement
of proof of negligence.
Liability
Being responsible for the damages or injury you or someone else you're responsible for has done.
The 7 Characteristics of a Contract
1. Personal Contract
2. Conditional Contract
3. Adhesion
4. Indemnity
5. Aleatory
,6. Unilateral
7. Utmost Good Faith
Personal Contract
Is stipulation of a contract that says the contract is for the name person and cannot be transferred to
another.
Conditional Contract
Stipulates set by a contract. "You can do this, but...."
Adhesion
A stipulation that the contract and it's language is binding, or "sticks" and the parties agreeing cannot
back out so long as the conditions are met.
Indemnity
The contract agrees to indemnify, or make whole again the customer. Makes them no better, nor
worse, just whole.
Aleatory
The stipulation that the contract must include and unequal transfer of money. Ex. The insured signed
a contract a month ago and has paid a single payment of $300. The company has only received $300,
but it on the hook to pay out $30,000 in the event of a loss.
Unilateral
Stipulation that the contract is one-sided. Ex. The customer doesn't HAVE to pay the insurance
company, but IF they do, then the insurance company HAS to pay out.
Utmost Good Faith
Parties believe that both will deal with eachother honestly and fairly, without misleading or
withholding
Insurance
A contract by which an Insurance company agrees to compensate an insured for a covered loss in
return for a premium payment.
Underwriting
Process of evaluating policyholders to determine eligibility for coverage and pricing
Law of Large #'s
Principle that the larger the examples of data, the more accurate the information
Speculative Risk
Risk of Gain OR Loss Ex. Gambling or Investment Insurance
Pure Risk
, No chance of gain or benefit. The only kind that insurance deals with.
Exposure
An opportunity for risk or loss
Risk
Possibility of financial loss
Peril
The direct cause of a loss
Representation
Statements on an insurance contract that the insured BELIEVES to be true
4 Means of Managing Risk
1.Reduction
2.Retain
3.Avoid
4.Transfer
Reduction
reduce the risk shared by the insured and insurer Ex. Good maintenance
Retain
Taking risks by retaining the risk to ones self. Ex. Not reporting an accident to the insurance company,
or not getting insurance at all.
Avoid
Avoiding risk all together. Ex. Not driving at all
Transfer
Transferring risk. Ex. Getting insurance in the first place transfers risk from the insured to the insurer
Insurable Interest
To have insurable interest in something it's loss or damage would have to cause you to suffer financial
or economic loss. Must have ownership
Hazards
Event increases likelyhood of loss. Ex. Texting while driving, weather.
Insurance Agreement
Agreement by insurance to provide coverage in exchange for a premium
Conditions in an Insurance Contract
Questions with 100% Correct Answers
What are 3 subjects an auto policy covers?
1. Body
2. The vehicle
3. Assets
Bodily Injury Types
Personal Injury
Med Pay
Uninsured Motorist
No Fault Insurance
State stipulates that parties cannot file a claim to the other persons insurance policy unless required
in excess. Instead, each party is required to file a primary claim against their own insurance regardless
who is at fault. EX. Florida
Financial Responsibility Laws
State Laws regulating that people are to carry a minimum coverage amount set by the state to protect
themselves, others, and property.
P.A.P
Personal Automotive Policy
Negligence
The failure to act as a prudent person would under similar circumstances
Legal Liability
Involves proven negligence or fault
Vicarious Liability
Being responsible for the negligent acts of someone else. Ex. Your children
Absolute or Strict Liability
Stems from hazardous or dangerous activities that makes the owner liable WITHOUT the requirement
of proof of negligence.
Liability
Being responsible for the damages or injury you or someone else you're responsible for has done.
The 7 Characteristics of a Contract
1. Personal Contract
2. Conditional Contract
3. Adhesion
4. Indemnity
5. Aleatory
,6. Unilateral
7. Utmost Good Faith
Personal Contract
Is stipulation of a contract that says the contract is for the name person and cannot be transferred to
another.
Conditional Contract
Stipulates set by a contract. "You can do this, but...."
Adhesion
A stipulation that the contract and it's language is binding, or "sticks" and the parties agreeing cannot
back out so long as the conditions are met.
Indemnity
The contract agrees to indemnify, or make whole again the customer. Makes them no better, nor
worse, just whole.
Aleatory
The stipulation that the contract must include and unequal transfer of money. Ex. The insured signed
a contract a month ago and has paid a single payment of $300. The company has only received $300,
but it on the hook to pay out $30,000 in the event of a loss.
Unilateral
Stipulation that the contract is one-sided. Ex. The customer doesn't HAVE to pay the insurance
company, but IF they do, then the insurance company HAS to pay out.
Utmost Good Faith
Parties believe that both will deal with eachother honestly and fairly, without misleading or
withholding
Insurance
A contract by which an Insurance company agrees to compensate an insured for a covered loss in
return for a premium payment.
Underwriting
Process of evaluating policyholders to determine eligibility for coverage and pricing
Law of Large #'s
Principle that the larger the examples of data, the more accurate the information
Speculative Risk
Risk of Gain OR Loss Ex. Gambling or Investment Insurance
Pure Risk
, No chance of gain or benefit. The only kind that insurance deals with.
Exposure
An opportunity for risk or loss
Risk
Possibility of financial loss
Peril
The direct cause of a loss
Representation
Statements on an insurance contract that the insured BELIEVES to be true
4 Means of Managing Risk
1.Reduction
2.Retain
3.Avoid
4.Transfer
Reduction
reduce the risk shared by the insured and insurer Ex. Good maintenance
Retain
Taking risks by retaining the risk to ones self. Ex. Not reporting an accident to the insurance company,
or not getting insurance at all.
Avoid
Avoiding risk all together. Ex. Not driving at all
Transfer
Transferring risk. Ex. Getting insurance in the first place transfers risk from the insured to the insurer
Insurable Interest
To have insurable interest in something it's loss or damage would have to cause you to suffer financial
or economic loss. Must have ownership
Hazards
Event increases likelyhood of loss. Ex. Texting while driving, weather.
Insurance Agreement
Agreement by insurance to provide coverage in exchange for a premium
Conditions in an Insurance Contract
